SL Green Sells Stake in Two Manhattan Properties for $649M

by Haisten Willis

NEW YORK CITY — SL Green Realty Corp. (NYSE: SLG), New York City’s largest commercial property owner and an S&P 500 company, has sold its interest in two Manhattan properties with an aggregate value of $649 million.

In the first transaction, SL Green has agreed to sell its interest in the land underneath 885 Third Ave., also known as the Lipstick Building, for a gross sales price of $453 million. A partnership between Ceruzzi Properties and Shanhai Municipal Investment USA is the buyer, according to the Commercial Observer.

In the second deal is an agreement to sell the recently completed Pace University dormitory tower, located at 33 Beekman St., for a gross sales price of $196 million. SL Green owns the property in a joint venture.

SL Green acquired the leased fee interest in 885 Third Ave. in a joint venture in 2007 at a gross asset valuation of $317 million and fully consolidated its position in 2010 at a valuation of $352 million.

As part of the transaction, SL Green will retain a preferred equity position. The sale, executed at a capitalization rate of 3.8 percent, will generate net proceeds to SL Green of approximately $45 million. The sale is scheduled for completion in the fourth quarter of 2015.

SL Green and the Naftali Group jointly developed 33 Beekman. It houses 772 dormitory beds and features a public plaza and ground-floor retail and amenity space used by the university.

The project is SL Green’s second dormitory development for Pace University, following on the heels of a 609-bed dormitory and retail project at 180 Broadway, which was completed and delivered in early 2013.

The sale, with a capitalization rate of 3.9 percent, will generate net proceeds to SL Green of approximately $64 million. The transaction is scheduled for completion in the first half of 2016, subject to customary closing conditions.

“These sales are a continuation of our previously announced strategy in connection with funding our acquisition of 11 Madison Ave. through the sale of non-core and complex assets,” says David Schonbraun, SL Green’s co-chief investment officer.

“The sale of 885 Third Ave. is the realization of our third successful investment in a Manhattan leased fee position, including Two Herald Square and 292 Madison Ave., while the sale of 33 Beekman further [shows] the strength of SL Green’s internal development team and its ability to construct high-quality properties that can meet the unique needs of space users,” adds Schonbraun.

SL Green’s stock price closed on Tuesday, Oct. 20, at $118.34 per share, up from $112.73 one year ago.

— Haisten Willis

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